ABSTRACT
Since the Second World War the World Bank-IMF led development strategies underwent dramatic shifts. In order to understand the present policy discourses we need to know the policy context that contributed to the shifts in the strategies of the Bretton Woods Institutions (BWIs). Indeed, much of today’s PRSPs are owed to the previous strategies. Until the 1970s development policy was dominated by an import substitution industrialization (ISI) strategy advocating for the promotion of large-scale modern industries by means of strong government interventions in the market, such as trade protection, directed credits, and subsidies. In the 1980s a new paradigm emerged with the market as a universally efficient mechanism for allocating scarce resources and promoting economic growth. It represented a major assault on national developmentalism in the context of which the state had played an active role in the developmental process. This new paradigm advocated a new development model based on the primacy of individualism, market liberalism, outward-orientation, and state contraction. The organizing principle of the paradigm was the notion of a minimal state whose principal role was confined to that of serving law and order, macroeconomic stability, and the provision of physical infrastructure (Öniş and Şenses: 2003). The new paradigm also had other names. Some called it neo-liberalism, some market fundamentalism, and some free-market economics or Washington Consensus (Broad: 2004). The emergence of the neo-liberal regime may also be attributed to the defeat of the US in the Vietnam War that caused the relative decline of American power and triggered the development of hegemonic stability and regime theories in American universities (Pramono: n.d.).
